Oil Drops as US Lifts Sanctions on Iranian Oil Officials
By Adedapo Adesanya
After the United States removed some Iranian oil officials from its list of designated persons’ subject to sanctions, oil prices dropped on Thursday amid renewed demand prospects.
Brent crude pulled back to $72.00 per barrel, falling 52 cents or 0.72 per cent while the West Texas Intermediate (WTI) crude settled at $69.76 per barrel, dropping 53 cents or 0.75 per cent.
The US Department of the Treasury said on Thursday it was removing several Iranian officials from its list of designated persons, including three directors of the National Iranian Oil Company (NIOC).
This served as a change of tone after its Secretary of State, Mr Antony Blinken, said earlier this week that hundreds of US sanctions will remain on Iran even if the United States rejoins a nuclear accord.
President Joe Biden’s administration has been engaged in indirect talks with Iran about reversing former President Donald Trump’s exit from the 2015 nuclear accord, formally known as the Joint Comprehensive Plan of Action (JCPOA).
However, a US official reportedly said that the activity was routine and not related to talks with Iran over reviving the 2015 deal to restrict its nuclear weapons development.
Yet, oil prices still went south since the market still believes that Iran could provide about 1 million to 2 million barrels per day in additional oil supply if a deal is struck and sanctions lifted.
They are, however, expected to return to the bullish territory soon as the market digest the latest Organisation of the Petroleum Exporting Countries (OPEC) oil demand forecast.
OPEC reiterated its forecast yesterday that global oil demand would jump in the second half of this year.
Global oil demand will rise by 6 million barrels per day this year, led by strong consumption in China and the United States, especially in the second half of 2021 with growing economies and border re-openings, OPEC said on Thursday 2021 demand forecast unchanged from last month.
Before OPEC’s monthly report was published, prices were lower as the market was still digesting the inventory draw in the United States for the week to June 4.
On Wednesday, the Energy Information Administration (EIA) reported a 5.2 million-barrel fall in domestic crude inventories for the week.
Optimism for strong economic demand after new US unemployment claims fell to their lowest since the country’s first wave of COVID-19 last year is also expected to help the market.
Consumer prices in the world’s largest economy also increased solidly in May as the pandemic’s grip on the economy continues to ease.